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Corruption and growth: a complex relationship

Corruption and growth: a complex relationship PurposeThis paper investigates the growth-corruption relationship in a sample of 146 countries for the period 1984-2009. While negative effects of corruption on growth have drawn economists’ interest in recent years, our main contribution is to examine the effects by employing the hierarchical polynomial regression to evaluate the relationship after controlling economic and institutional factors.Design/methodology/approachThe results are estimated using panel generalized methods of moments. FindingsThe results challenge some of the findings that negative growth-corruption association in the literature, but also provide some new inferences. The findings reflect that corruption is not always growth-inhibitory, for some countries it is growth-enhancing which supports the “greasing-the-wheels” hypothesis. Originality/valueThe paper investigates the growth-corruption relationship using panel generalised methods of moments. Our results suggest that a cubic function best fitted the data. The finding suggests that in the medium corrupt countries corruption stimulates growth by reducing red-tape. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Development Issues Emerald Publishing

Corruption and growth: a complex relationship

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References (52)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1446-8956
DOI
10.1108/IJDI-01-2016-0001
Publisher site
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Abstract

PurposeThis paper investigates the growth-corruption relationship in a sample of 146 countries for the period 1984-2009. While negative effects of corruption on growth have drawn economists’ interest in recent years, our main contribution is to examine the effects by employing the hierarchical polynomial regression to evaluate the relationship after controlling economic and institutional factors.Design/methodology/approachThe results are estimated using panel generalized methods of moments. FindingsThe results challenge some of the findings that negative growth-corruption association in the literature, but also provide some new inferences. The findings reflect that corruption is not always growth-inhibitory, for some countries it is growth-enhancing which supports the “greasing-the-wheels” hypothesis. Originality/valueThe paper investigates the growth-corruption relationship using panel generalised methods of moments. Our results suggest that a cubic function best fitted the data. The finding suggests that in the medium corrupt countries corruption stimulates growth by reducing red-tape.

Journal

International Journal of Development Issues – Emerald Publishing

Published: Jul 4, 2016

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